Cybersecurity Risks and Connected Car Insurance: What Every Driver Needs to Know in 2025

Introduction: When Your Car Becomes a Target

Not long ago, the idea of a hacker taking control of a moving vehicle would have sounded like the plot of a science fiction thriller. Today, it is a documented, real-world threat that has sent shockwaves through the automotive industry, the cybersecurity community, and the insurance sector alike.

The modern automobile is no longer just a mechanical machine. It is a sophisticated, internet-connected computer on wheels — capable of receiving software updates over the air, communicating with traffic infrastructure, sharing data with manufacturers, and even driving itself. With all of this technological advancement comes an entirely new category of risk: automotive cybersecurity vulnerabilities.

For consumers, fleet operators, and auto insurance providers, understanding the intersection of cybersecurity risks and connected car insurance has never been more urgent. This article explores the cybersecurity threats facing connected vehicles today, the financial and personal consequences of those threats, how the insurance industry is adapting, and what practical steps drivers can take to protect themselves.

What Is a Connected Car?

A connected car is a vehicle equipped with internet access and wireless communication capabilities that allow it to share data with other devices, networks, vehicles, and infrastructure. Connected cars typically feature:

• Telematics systems that monitor driving behavior, speed, location, and diagnostics
• Over-the-Air (OTA) software updates allow manufacturers to remotely update firmware and applications
• V2X (Vehicle-to-Everything) communication that links the car to other vehicles, traffic lights, and road infrastructure
• Infotainment systems connected to smartphones, apps, and cloud platforms
• Advanced Driver Assistance Systems (ADAS), including lane-keeping, automatic braking, and adaptive cruise control
• GPS and navigation systems that constantly track and transmit location data
• Remote access features enabling owners to lock, unlock, start, and monitor their vehicles via smartphone apps

According to industry analysts, the number of connected vehicles on the road globally has surpassed 400 million, and that number is expected to grow significantly as electric vehicles and autonomous cars become mainstream. This massive digital footprint creates an attack surface that cybercriminals are actively working to exploit.

The Major Cybersecurity Risks in Connected Cars

1. Remote Vehicle Hacking

One of the most alarming cybersecurity risks facing connected car owners is the possibility of remote hacking — where an attacker gains unauthorized access to a vehicle’s digital systems from a distance, without ever physically touching the car.

In one of the most famous demonstrations of this vulnerability, security researchers Charlie Miller and Chris Valasek remotely hacked a Jeep Cherokee in 2015, taking control of the steering, brakes, and transmission while the vehicle was traveling at highway speed. The incident led to a recall of 1.4 million vehicles and sent a clear message to the automotive world: connected cars are hackable.

Since then, researchers have demonstrated similar vulnerabilities in other major brands. The attack vectors include compromised infotainment systems, vulnerable telematics control units (TCUs), unsecured Wi-Fi hotspots, and exploited Bluetooth connections. As cars become more autonomous and more connected, the potential damage from such attacks grows exponentially.

2. Keyless Entry and Relay Attacks

Modern vehicles increasingly use keyless entry and push-button ignition systems — and these systems are a prime target for thieves. Relay attacks involve two criminals working together: one stands near a home to amplify the signal from a key fob kept inside, while the other stands near the car to receive the amplified signal and trick the vehicle into thinking the key is present.

This type of theft requires no physical key, leaves no trace of forced entry, and can be completed in under 60 seconds. Insurance companies across Europe and North America have reported a dramatic rise in keyless car thefts, prompting policy changes and renewed scrutiny of vehicle security standards.

3. OTA Update Exploitation

Over-the-Air (OTA) updates are one of the most convenient innovations in modern automotive technology, allowing manufacturers to push bug fixes, performance improvements, and new features directly to a vehicle’s software without requiring a dealership visit. However, this same mechanism can be exploited by hackers.

If an attacker can intercept or spoof an OTA update, they could potentially install malicious software directly into a vehicle’s critical systems — including the engine control unit (ECU), the braking system, or the steering system. This type of attack is particularly dangerous because it is silent, remote, and could affect millions of vehicles simultaneously if a manufacturer’s update server is compromised.

4. GPS Spoofing and Jamming

GPS spoofing involves transmitting false GPS signals to a vehicle’s navigation system, causing it to believe it is in a different location than it actually is. This technology, once limited to sophisticated military operations, has become increasingly accessible to criminal actors.

GPS spoofing poses serious risks to fleet operators, logistics companies, and autonomous vehicle systems that rely on precise location data for routing and safety decisions. In extreme cases, it could be used to misdirect autonomous vehicles, deceive law enforcement, or facilitate cargo theft by manipulating a truck’s reported location.

GPS jamming, on the other hand, involves broadcasting radio frequency interference to block GPS signals entirely — disabling navigation and tracking features and allowing a vehicle to move undetected.

5. Data Theft and Privacy Breaches

Connected cars collect an enormous amount of personal data. Every trip you take, every location you visit, every phone call you make through your car’s hands-free system, and every habit or pattern in your driving behavior is potentially being recorded and transmitted to cloud servers.

A study by the Mozilla Foundation identified major automakers as among the worst offenders when it comes to consumer data privacy, with many manufacturers collecting data that goes far beyond what is needed for vehicle operation — including personal information that is then shared with or sold to third parties. This data, if improperly secured or exposed in a breach, can be used for identity theft, stalking, insurance fraud, or targeted criminal activity.

6. Ransomware Attacks on Connected Vehicles and Fleet Systems

Ransomware — malicious software that encrypts a victim’s data and demands payment for its release — has already devastated hospitals, governments, and corporations. It is now making its way into the automotive sector.

Fleet management systems, which control thousands of commercial vehicles, are particularly attractive targets for ransomware attackers. A successful attack on a logistics company’s connected fleet could bring its entire operation to a halt, costing millions of dollars per day. As vehicles become more software-dependent, even individual consumer vehicles may one day be targets for ransomware that disables the car until a ransom is paid.

7. Supply Chain Vulnerabilities

Modern vehicles contain hundreds of software components sourced from dozens of third-party vendors and suppliers. Each of these components represents a potential entry point for cyber attackers. A compromised chip manufacturer, a vulnerable third-party app integrated into an infotainment system, or a poorly secured telematics provider can all serve as backdoors into a vehicle’s network.

Supply chain attacks are particularly difficult to detect and prevent because they exploit the trust relationships between automakers and their suppliers. The automotive industry’s adoption of software-defined vehicles makes supply chain security one of the most critical challenges facing manufacturers today.

How Cybersecurity Risks Are Reshaping Car Insurance

The emergence of automotive cybersecurity threats is forcing the insurance industry to fundamentally rethink how it assesses risk, prices premiums, and handles claims. Traditional auto insurance policies were designed to cover physical damage, bodily injury, and liability — not software exploits, data breaches, or remote takeovers.

The Gap in Traditional Auto Insurance Coverage

Most standard auto insurance policies do not explicitly cover losses resulting from cyberattacks. This creates a significant coverage gap for vehicle owners who may suffer:

• Vehicle theft facilitated by a relay or hacking attack
• Loss of vehicle use due to a ransomware attack
• Personal financial losses resulting from data stolen from a connected car
• Damage caused by a remotely compromised vehicle

Some insurers have begun updating their policy language to clarify whether cyber-related incidents are included or excluded, but there is still enormous inconsistency across the market. Many drivers remain unaware that their vehicle may be vulnerable and that their current insurance policy may offer little protection against cyber-related losses.

The Rise of Cyber-Specific Auto Insurance Products

In response to growing demand, some insurers have begun developing dedicated automotive cybersecurity insurance products. These specialized policies are designed to complement standard auto insurance by covering losses specifically arising from cybersecurity incidents, including:

• Cyber theft coverage — protecting against vehicle theft enabled by hacking or relay attacks
• Data breach liability — covering legal costs and damages if data collected by a connected vehicle is compromised
• Ransomware coverage — paying ransom demands or recovery costs if vehicle systems are locked by malware
• Trip interruption coverage — compensating drivers if a cyberattack disables their vehicle mid-journey
• Cyber liability for autonomous vehicles — covering third-party injury or property damage caused by a hacked self-driving system

These products are currently most common in the commercial fleet and corporate vehicle market, but consumer-facing options are becoming increasingly available as the threat landscape grows.

Telematics and the Double-Edged Sword of Data Collection

Many insurers offer usage-based insurance (UBI) or telematics programs in which drivers agree to allow their insurer to collect data about their driving behavior — speed, braking habits, time of day driving, mileage — in exchange for potential premium discounts.

While these programs can benefit safe drivers financially, they also introduce significant privacy and security concerns. The telematics devices and apps used to collect this data represent additional points of vulnerability in a vehicle’s digital ecosystem. If a telematics provider’s systems are breached, insurers and their customers’ data could be exposed.

Furthermore, the growing volume of driving data collected by insurers raises important questions about data ownership, consent, and how long this information is retained and who has access to it.

Impact on Insurance Premiums and Risk Assessment

Cybersecurity vulnerabilities are beginning to factor into how insurers assess vehicle risk and set premiums. Vehicles with known security weaknesses, outdated software that has not been patched, or high-value data profiles may attract higher premiums in the future.

Conversely, vehicles that meet established cybersecurity standards — such as those certified under the UNECE WP.29 regulation (a global standard for vehicle cybersecurity management systems) — may qualify for discounts, much like safety features such as anti-lock brakes or collision warning systems do today.

Insurers are also beginning to partner with cybersecurity firms to analyze vehicle vulnerability data and incorporate it into their actuarial models, creating a new frontier in risk-based pricing.

Regulatory Landscape: What Governments Are Doing

Governments and international bodies are taking cybersecurity risks in connected vehicles increasingly seriously. Several regulatory frameworks have been introduced or are being developed to establish minimum cybersecurity standards for vehicles:

UNECE WP.29 Regulations

The United Nations Economic Commission for Europe (UNECE) adopted two landmark regulations in 2020 — UN Regulation No. 155 (on cybersecurity) and UN Regulation No. 156 (on software updates). These regulations require automakers to implement a certified Cybersecurity Management System (CSMS) for all new vehicles sold in participating countries, and to manage software update risks across the vehicle lifecycle.

These regulations apply to the EU, Japan, South Korea, and several other countries, and they are widely expected to set the global benchmark for automotive cybersecurity.

The U.S. Approach

In the United States, the National Highway Traffic Safety Administration (NHTSA) has issued voluntary cybersecurity best practices for the automotive industry, though binding federal regulations remain limited. Several bills have been introduced in Congress to mandate minimum cybersecurity standards for connected vehicles, and there is growing bipartisan support for stronger federal action.

Some states, including California, have enacted their own data privacy laws that affect how connected car data is collected, stored, and shared — adding another layer of compliance complexity for automakers and insurers operating in those markets.

International Standardization Efforts

The International Organization for Standardization (ISO) and the Society of Automotive Engineers (SAE) jointly published ISO/SAE 21434, a comprehensive standard for automotive cybersecurity engineering. This standard provides a framework for managing cybersecurity risks throughout the vehicle development lifecycle and is increasingly being adopted by automakers and suppliers worldwide.

What Automakers Are Doing to Address Cyber Risks

Automakers are investing heavily in cybersecurity as they recognize that a major cyber incident involving their vehicles could result in massive liability, reputational damage, and regulatory sanctions.

Security by Design

Leading manufacturers are embracing a “security by design” philosophy, integrating cybersecurity considerations into every stage of vehicle development — from component selection and software architecture to testing and post-launch monitoring. This approach aims to build resilience into the vehicle from the ground up rather than bolting on security measures after the fact.

Dedicated Cybersecurity Operations Centers

Several major automakers, including Toyota, GM, and Volkswagen, have established dedicated Vehicle Security Operations Centers (VSOCs) — specialized teams that monitor connected vehicle fleets in real time for signs of cyber threats, much like a corporate IT security operations center monitors enterprise networks.

Bug Bounty Programs

Following the lead of the technology industry, automakers including Tesla, Ford, and Fiat Chrysler have launched bug bounty programs — offering financial rewards to independent security researchers who discover and responsibly disclose vulnerabilities in their vehicles’ digital systems. These programs have proven effective at identifying security weaknesses before malicious actors can exploit them.

Secure OTA Update Infrastructure

Manufacturers are investing in cryptographically secure OTA update infrastructure that verifies the authenticity and integrity of software updates before they are applied to a vehicle. Technologies such as code signing and secure boot are being adopted to ensure that only legitimate, manufacturer-approved software can be installed on vehicle systems.

What Drivers Should Do to Protect Themselves

While automakers and insurers have critical roles to play, individual drivers can also take meaningful steps to reduce their cyber risk exposure:

Keep your vehicle software up to date. Apply OTA updates promptly when they are released by your manufacturer. These updates often contain important security patches. If your vehicle requires you to visit a dealership for updates, schedule those appointments regularly.

Be cautious about third-party apps and devices. Only connect applications to your vehicle’s infotainment system from trusted, official sources. Avoid using unofficial telematics devices or third-party OBD-II dongles that plug into your vehicle’s diagnostic port, as these can introduce vulnerabilities.

Protect your key fob from relay attacks. Store your key fob in a signal-blocking pouch (a Faraday bag) when at home to prevent your signal from being amplified and exploited by thieves. This is one of the simplest and most effective protections against keyless entry theft.

Review your insurance policy carefully. Contact your insurer and ask specifically whether cyber-related vehicle theft or damage is covered under your current policy. If it is not, ask about available endorsements or dedicated cyber coverage products.

Understand what data your car collects. Review your vehicle owner’s manual and the privacy policy of your manufacturer’s connected services. Be aware of what data is being collected, how it is used, and what opt-out options are available to you.

Use strong, unique passwords for connected car apps. Your vehicle’s companion app — which may allow you to start, unlock, or track your car remotely — is a potential attack vector. Use strong, unique passwords and enable multi-factor authentication wherever possible.

Monitor for unusual vehicle behavior. If your vehicle behaves unexpectedly — such as unlocking on its own, displaying unusual error messages, or exhibiting erratic system behavior — contact your manufacturer’s customer service or dealership immediately.

The Future of Cybersecurity and Connected Car Insurance

The relationship between automotive cybersecurity and insurance is still in its early stages, but the trajectory is clear. As vehicles become more connected, more autonomous, and more software-dependent, cybersecurity risk will become an increasingly central component of auto insurance underwriting, pricing, and claims handling.

Several key trends are likely to shape this landscape in the coming years:

Mandatory cybersecurity certifications are an insurance requirement. Insurers may begin requiring vehicles to carry certifications demonstrating compliance with established cybersecurity standards — similar to how vehicles must pass safety tests to qualify for standard coverage.

Integration of cybersecurity scores into premium pricing. Just as a vehicle’s safety rating affects its insurance cost today, a vehicle’s cybersecurity score — based on software update frequency, known vulnerabilities, and security architecture — may influence premiums in the future.

Autonomous vehicle liability frameworks. As truly autonomous vehicles reach the mass market, the question of liability in an accident caused by a hacked self-driving system will require entirely new legal and insurance frameworks. Who is responsible — the manufacturer, the software developer, the insurer, or the hacker? These questions are currently being debated by legal scholars, regulators, and industry stakeholders around the world.

Collaborative data sharing between insurers and manufacturers. Insurers and automakers will likely develop formal data-sharing agreements to improve risk assessment and accelerate incident response when cyber incidents do occur. This kind of collaboration will be essential for building the actuarial models needed to price cyber risk accurately.

Growth of the standalone automotive cyber insurance market. The automotive cyber insurance market is expected to expand significantly as awareness grows among both consumers and commercial fleet operators. Market research suggests this sector could become a multi-billion-dollar segment of the broader cyber insurance market within the next decade.

Conclusion: Driving Into a Secure Future

The connected car revolution has brought extraordinary benefits — greater convenience, improved safety, reduced emissions, and entirely new possibilities for transportation. But it has also introduced a new frontier of risk that neither the automotive industry nor the insurance sector was fully prepared for.

Cybersecurity threats targeting connected vehicles are real, growing, and increasingly sophisticated. From relay attacks on keyless entry systems to the chilling prospect of remotely hacked autonomous vehicles, the stakes have never been higher. At the same time, the insurance industry’s ability to adequately cover these risks is still catching up to the technology.

For drivers, the message is clear: connected car cybersecurity is not just an IT problem — it is a personal safety, financial, and insurance issue. Understanding the risks, staying informed about your vehicle’s security features and updates, and reviewing your insurance coverage for cyber-related gaps are no longer optional steps for the tech-savvy few. They are essential responsibilities for every modern vehicle owner.

As regulators, automakers, insurers, and cybersecurity professionals work together to build safer, more resilient connected vehicles and better insurance products, drivers who stay educated and proactive will be best positioned to navigate the road ahead — safely and securely.

In another related article, Best Long-Term Investments to Build Generational Wealth